The government has today, 6 February, Time to Talk Day, published its impact assessment for “breathing space”, a scheme designed to help millions of people in debt crisis, including those suffering with mental health problems, get their finances under control. The impact assessment explains why the government believes that putting in place a regulatory solution would be better in terms of social value than the other options of doing nothing or creating a voluntary breathing space, where creditors would be encouraged, but not required, to offer protections.
Under the scheme, those struggling with problem debt will be given a 60-day respite, during which interest and charges on their debt will be frozen and enforcement action from creditors will be halted. Those individuals who also receive mental health crisis treatment will benefit from the same protections until that treatment is complete. Throughout the respite period, individuals will also receive professional debt advice to help them find a long-term solution to their financial struggles.
Breathing space will cover debts like credit cards and loans but also a wide range of government debts. Creditors are also set to benefit from the policy; over £400m in extra repayment is expected in the first year, as individuals get the help they need to get their payments back on track.
The impact assessment estimates that the breathing space will help over 700,000 people in the UK get professional help in the first twelve months following implementation, increasing up to 1.2 million a year by the tenth year of operation. Between 25,000 and 50,000 of those helped each year will be people receiving mental health crisis treatment.
The government intends to implement the breathing space scheme in early 2021.